Following a regulatory decision to ban importing Arista products manufactured in Asia, the networking company says it's ready with "design-arounds" that will meet approval.
The International Trade Commission on Thursday issued a final determination that Arista Networks Inc. violated three Cisco Systems Inc. (Nasdaq: CSCO) patents in Arista's Ethernet switches. The ITC found two features are non-infringing. Arista said in a statement it intends to abide by the ITC's decision. Cisco posted a copy of the decision on its website.
Arista can continue importing the equipment for 60 days, pending a review by the US Trade Representative. If the USTR upholds the ITC decision, then Arista's imports must cease.
Even a negative decision by the USTR doesn't mean Arista padlocks its doors and starts selling off the office furniture. The company says it has developed a new version of its EOS software with "design-arounds" that it believes are non-infringing, and plans to seek regulatory approvals for that software. (See Arista Writing Alternative EOS – Just in Case.)
EOS is the brains of Arista's networking equipment and foundation of its business; its hardware is based on merchant silicon.
In Arista's statement, Marc Taxay, senior VP and general counsel, took a shot at Cisco.
"Despite Cisco's rhetoric claiming that the lawsuits are a defensive move to protect its intellectual property, these actions are clearly part of a broader effort to use litigation to preserve Cisco's market position," he said. "If allowed to succeed, Cisco's scheme would have a chilling effect on innovation. While we will defend our rights in these actions, our primary focus remains on the continued supply of products to our customers."
Cisco says two of the three patents involved in the decision cover Cisco's private VLAN network security technology which Arista included in its switches. The third covers Cisco's proprietary core SySDB system database technology "misappropriated by Arista, which Arista's CEO has ironically referred to as Arista's 'secret sauce,' " according to a statement from Mark Chandler, senior vice president, general counsel and chief compliance officer, on the Cisco blog.
Thursday's decision affirms a 244-page ruling issued by Administrative Law Judge David Shaw in February, Chandler notes. (See ITC Judge Rules in Favor of Cisco Against Arista.)
"This marks the end of Arista's ability to mislead its shareholders and customers about the infringing nature of their products," Chandler says.
Chandler also takes issue with Arista's plans to submit the "design-around" for regulatory approval "without Cisco's participation," adding: "We believe that any such review should be transparent and should continue to be conducted in a fair and open process in the ITC, where Arista has the burden of proof."
The legal action between Cisco and Arista is broader than the current case, Chandler notes. In August, Cisco expects an initial ruling on a separate ITC investigation on another group of patents, in which the ITC staff attorney has recommended findings of infringement. "And in November, Arista faces trial on charges of patent and copyright infringement involving its use of Cisco's proprietary interface and related materials," says the Cisco attorney.